We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
POTASH PRICES AND COMPETITION.
- Authors
Hayes Jr., Samuel P.
- Abstract
The article focuses on characteristics of the potash industry to trace the development of tendencies expected of an oligopoly in the U.S. Potash is a highly standardized commodity, purchased by a thoroughly sophisticated group of consumers. Since the bulk of potash is used in fixed proportions in fertilizer, itself the subject of a relatively inelastic demand, the short-run demand for potash is extremely inelastic. Furthermore, since potash producers operate under conditions of large fixed costs, the short-run supply curve also is inelastic, at least with respect to price reductions. Finally, potash sellers believe that their individual demand curves are inelastic below current prices, because they expect any price reduction to be met, and either completely elastic or completely inelastic above present prices, depending upon whether the seller is the price follower or the price leader. Consequently, while price changes have been relatively infrequent, there has usually been more pressure for increases than for reductions. Prices have tended to rise to, and remain at, highly profitable levels, and investment and capacity in the industry have therefore expanded.
- Subjects
UNITED States; POTASH industry; ALKALI industry; OLIGOPOLIES; IMPERFECT competition; COMMODITY control
- Publication
Quarterly Journal of Economics, 1942, Vol 57, Issue 1, p31
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1881812